Industrials
One of those rare stocks that has changed from a low-priced transformation name to a thematic / growth name and one Asymmetric Advisors has maintained a positive view on for over 10 years. Despite the shares being up more than 60% over the last 12 months, this has become a go-to stock for global funds seeking Japan exposure given its high share in grid transformation and leading position in growing domestic IT DX/AI. Another recent earnings beat still leaves Hitachi with room to overshoot its full year target.
Edition: 204
- 07 February, 2025
Industrials
Asymmetric Advisors has been recommending Hitachi for over a decade now and while one could argue that the shares look technically overextended both on chart and PER after the recent rise on the back of its 3/25 forecast being above consensus, they stick with the company as a core Japan holding because 1) earnings are increasingly dictated by IT and DX which should continue to grow and see improving margins over the next few years; 2) grid equipment business has a 2-3 year backlog and rising margins. Meanwhile, analyst consensus has just caught up with the CoE but Asymmetric Advisors sees upside to the earnings.
Edition: 186
- 17 May, 2024
China Elevators: 3Q22 orders tracking below expectations
SRR's channel checks point to orders growth in the negative 15-25% Y/Y range through August - worse than the negative 5-15% range that occurred in 1H22, despite an easier comp. Although their early September read is slightly better, it may not be enough to lift the quarter especially since there have also been less-than-encouraging reports of industry layoffs at Elevator OEM factories in the Shanghai region. OTIS and Hitachi appear to have held / gained market share 3QTD and YTD, while Schindler and Thyssen have lagged. After a strong 1H22 KONE appears to be struggling.
Edition: 144
- 16 September, 2022
Hitachi (6501) & Descente (8114)
Industrials & Consumer Discretionary
Hitachi - shares are up >50% since last highlighted in The Cut but still good value. This transformed group with its core focus now on power grid transformation work and industrial digitalisation is a multi-year growth story.
Descente - an underperforming athleisure company that Itochu took over and is transforming and only Asymmetric has been covering. Via a partnership with Anta Sports, the China store network is being aggressively rolled out ahead of the Winter Olympics and China earnings will rise from virtually zero to become the main contributor.
Edition: 115
- 23 July, 2021
Toshiba Bid Underlines Japan Value
Asset Allocation
The Toshiba private equity offer and Hitachi’s ongoing corporate reinvention highlights the significant upside in Japan if balance sheets are managed more aggressively. Given the China geopolitical threat the Toshiba deal looks politically doable alongside a likely bid by Micron for NAND maker, Kioxia, which will further boost activist ambitions in the country. With the weak JPY offsetting a cyclical rally, Japan’s share of the MSCI AC is down to under 7% (despite an accelerating buyback and ROE trend) - as US share peaks, this could double within five years.
Edition: 108
- 16 April, 2021